More tax-dodging sea-steading nonsense

"Startup ship of dreams": libertarian fantasy hootenanny meets rusty, smelly "hackerspace" dorm room.

The biggest draw is seemingly not the fact that you don't need a visa to live and work on the ship, but rather entrepreneurs are coming for the "awesome startup and technology-oriented space." The second most critical element for startups was the close proximity to Silicon Valley's venture capital scene.

Rent to live on the ship is about as much as a single person living in San Francisco has to pay: around $1600 a month. That is, if you're willing to bunk up. The price includes both living and office space, but will range from $1200 for a shared cabin, and runs up to $3000 for a "top-tier single" cabin. Ferries will shuttle entrepreneurs from the ship to Silicon Valley daily, and Blueseed says it will help those from outside the US enter. Blueseed is also looking for incubators who are interested in helping the startups.

Previously, previously.

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61 Responses:

  1. tjic says:

    As a starry eyed libertarian I really want to disagree with your characterization here.

    But, you know, Sealand and Havenco.

    So instead I'll just say "ouch".

  2. Jeffrey Paul says:

    The best part about this is that the whole thing needs to be in international waters for it to work, legally, which means that when huge bands of armed pirates show up to relieve all the dorks of their expensive computer hardware, the US Navy won't give two fucks about four fucks.

    This whole thing is going to be a continuous lulzcow, I assure you.

    • jwz says:

      And who knew you could get tetanus from gold farming?

    • tjic says:

      > which means that when huge bands of armed pirates show up to relieve all the dorks of their expensive computer hardware

      Where, exactly, are huge bands of armed pirates going to base themselves for attacks just off San Francisco?

      Portland?

      > the US Navy won't give two fucks

      Yeah, the US Navy has a long history of not caring about piracy in international waters.

    • Cow says:

      Also, bringing people in and out from the city all the time? The first time there's a major outbreak of norovirus or bedbugs or whatever the hell else, it's going to be straight up amazing.

      • Glen Raphael says:

        Why would this be any different from cruise ships or navy ships in that regard?

        • Owen Jacobson says:

          Years of practice, or the lack thereof.

        • Owen Jacobson says:

          Sorry, that was pat of me. What I mean is: years of practice, or the lack thereof.

          It's not that I don't think that starry-eyed seasteaders can't learn to be prepared for all of the problems that come with living signifigantly removed from the general infrastructure. However, the odds that they'll be prepared for something to go wrong, at full scale, the first time around are not great, and it doesn't look like they understood the idea of "start small". They'll be lucky if it's something aggravating but basically survivable, like bedbugs, rather than some virulent social disease.

          I rather hope they've found some expert advice on this, but I'm not holding my breath.

          • Glen Raphael says:

            Seasteaders actually started out working on an extremely small scale, figuring out various issues with a community of houseboats in the Sacramento delta over a long weekend. Unfortunately, there are major economies of scale here. If you want to offer housing in the middle of the ocean for the same price as a San Francisco apartment, the ship has to be pretty big. They looked at some cool spar platform ideas but none really met the requirements. It seems likely that repurposing an old cruise ship or barge will be the best option for the first one.

            That "start small" project is next month, btw. June 2012 will see the fourth annual event. http://ephemerisle.org/wiki/Ephemerisle

            The Seasteading institute has made use of quite a lot of expert advice, though I'm sure they could always use more.

            • Lun Esex says:

              Lots of things look good on paper. Just like orbiting solar power satellites and the O'Neill cylinder, Bernal sphere, and Stanford torus space habitats built from lunar materials which would be needed to house the colonies of humans in space necessary to build them.

              The proposals for those all had discussions on economies of scale, too.

              The end of the oil embargo, higher efficiency in extracting and using fuel, and overall changes in global commerce killed the solar power satellites idea. (Implementation complexity and cost overruns/graft would have killed it anyway. See: SDI, VentureStar, the Ares/Orion/Constellation program, etc.)

              At this point I'd put my money on telepresence improvements within the timeframe of seasteading in international waters becoming non-experimental. That'll take a big enough whack at the "immigration" part of the problem that doing it for that reason won't ever become commercially viable.

            • pavel_lishin says:

              > over a long weekend

              Okay.

              • jwz says:

                Right, I think something might be missing between "I spent a weekend at a Burning Man spin-off in Sausalito" to "Donner Pass, here I come!"

                • Glen Raphael says:

                  The original concept for Ephemerisle was not just that it would be fun and educational but that it could gradually evolve into seasteading. The idea was that it might grow along several axes. Size: more people could show up every year until there's a really big community of enthusiasts to draw from and you start learning useful stuff about how to organize such a community. Timing: the festival could ramp up to run for more days continuously (currently it's a four-day thing). Frequency: you could have more events per year or have them in a variety of regions. Difficulty: Start in the delta, then using what we've learned move to the bay, then a bit outside the bay. then out in the open water.

                  Actually trying to do the event and doing more preliminary research revealed two huge problems with that plan:

                  (1) If the event is run by a corporation, even a nonprofit, the liability exposure per person in the early stages is astronomical. TSI could not afford to run the event at a reasonable price due to the cost of insurance. Therefore, though the event still happens it's now a "community-run" decentralized thing.

                  (2) The engineering to survive at sea is completely different from the engineering required to survive in the delta. You can't extrapolate from the latter to the former. Also, the engineering required to survive at sea just isn't worth doing at small scale. They've done the math and engineering and run the numbers; the minimum viable product here is pretty big. Though not impossibly so.

                  Anyway: yes, there are steps missing, and they're probably going to stay missing.

            • Ben Brockert says:

              What is your stake in this plan, by the way?

              • Glen Raphael says:

                I know Patri Friedman (former director of The Seasteading Institute) and I was an early fan of the general concept of Seasteading - I think it's a clever hack that could potentially make the world a better place. I've contributed to TSI and attended one of their annual conferences and am on some of the relevant mailing lists. I have no connection to Blueseed in particular; it's only interesting to me in that it's a potentially viable business model to help bootstrap some of the future possibilities.

                As for why I like it: An awful lot of people today live in miserable poverty because their governments are corrupt and inefficient and/or because their society happened (for whatever reason) to reach a bad equilibrium state in which people (correctly) don't trust one another and thus can't help one another very much. Meanwhile the current trend among rich countries has been to limit immigration and tighten up porous borders so even if poor people in bad circumstances can get out there's really nowhere else to go. Seasteading could provide an escape valve - it gives us a new frontier for people to explore and escape and try out new ideas.

                If seasteading succeeds, most of the people actually living out there will not be wealthy tax-dodging Americans. It'll be a refuge of the poor, tired, huddled masses yearning to breathe free, just like it says on the statue. But every new technology needs a few rich suckers - er, I mean "early adopters" - at the start to foot the bill, people who have the money to cover development expenses and don't mind that the new technology is unreliable and dangerous and expensive. The Blueseed project seems like a decent candidate for that. ("Medicruise" is another idea that would save the same purpose.)

        • Jubal says:

          Let's go to basics – how will be the medical emergencies handled? Let's assume that we're dealing with a foreign citizen without an US visa and without any medical insurance being paid by his Randian startup employer.

          Let's assume something simple: myocrdial infarction, lung infection, appendicitis, diabetes type I complications, even acute food poisoning with diarrhoea etc.

          What are the plans?

          • Glen Raphael says:

            There's little point in being right off the coast of the US if you can't qualify for either a B-2 or a tourist visa for short visits. Yes, the residents would be doing their work on the ship but most would still able to visit the US. So for whatever medical services the ship can't provide, the obvious option is to get treatment in the US under an emergency medical visa. Whether or not the employer pays for medical insurance (with or without extra coverage for helicopter evacuation in emergencies) the employee could still pay for such insurance out of his salary, or if not, pay expenses out-of-pocket. (It might make sense to bundle medical evacuation insurance coverage with the rent.)

            How do we we handle medical emergencies today among the (largely foreign national) crew of a cruise ship?

            It's also worth mentioning that putting essentially full-blown hospitals on ships off the coast is an excellent business opportunity in its own right. (The business model there is that you could provide all the benefits of "medical tourism" - newer procedures at a much lower cost than in the US - without requiring travel by air or going through customs on both ends.)

            • Jubal says:

              Ah, the good old “it will be grand” approach, clearly well thought-out. What about prophylaxis, maternal care, vaccinations, small injury handling…?

              • Glen Raphael says:

                Honestly, it's as if you were asking "but: how will they go to the bathroom?" or "But: how will they eat?" or "What about if they need a place to read books?"

                Why is your default assumption that there might not be some sort of nurse, doctor, EMT or similar person on board to do things like "small injury handling"? Do you similarly assume that about cruise ships? What is it that makes this seem like a hard problem? If you need some medical care, either you get it on the ship or you get it off the ship on a tourist-type visa like any other traveller would. Or in the worst case maybe you stop living on a ship for a while and go back to wherever you lived before. (Rent on the ship would likely include covering the cost of a bond that pays for return transportation to your home country.)

                There's a general seasteading FAQ here: http://www.seasteading.org/about/faq/

                • Jubal says:

                  Honestly, it is as if I were asking «do you have any idea about providing medical care».

                  …Which is exactly the question I'm asking, and you don't seem to have any idea how to answer it, because you don't know anything about providing basic long-term healtcare for a realtively numerous and isolated populace. It won't be like the cruise ship, it will be more like providing regular healthcare for a small-to-mid town.

                  And all you actually offer is hand-waving.

                  Note the vagueness of your replies; you can't say anything more than ‘some sort of nurse, doctor, EMT or similar person on board would might provide some sort of medical procedures’.

                  Anyway, have fun until the first outbreak of some benign virus infection.

                  • Glen Raphael says:

                    I was being vague because there are literally dozens of ways to solve the problem, any of which would work. But if you want to know specifically what Blueseed plans to do, Let Me Google That For You. Blueseed's FAQ ( http://www.blueseed.co/faq.html#transportation ) says simply:

                    "To augment our onboard medical facilities, our helipads will also provide emergency medical evacuation to the mainland in case of need."

                    So there you go, that's the plan. See the doc in his office on-board.

              • Elusis says:

                "Maternal care" - what woman in her right mind would go live in an overwhelmingly male closed community with restricted physical access without a police force under no country's laws? Unless you're talking about the inevitable pregnancies that will result from wholesale importation of underage girls from Southeast Asia and former Soviet Bloc countries as "comfort women" for employees, which I assume is already covered in section 317B of this Incredibly Cunning Plan.

  3. Jubal says:

    I give them about four weeks to start hating each other.

  4. Owen Jacobson says:

    Huh, it's Big Shell.

  5. NotTheBuddha says:

    I'm not seeing where the tax advantage is?

    • jwz says:

      If you are overly pedantic, perhaps substituting "INS-fee-dodging" for "tax-dodging" will make you happier. Same thing. It's the attitude that says, "it's fine for me to profit from all of the benefits and infrastructure of the State without paying back into the commons, because hey, 'they' made up the rules and I am completely amoral." Libertarians, in other words.

      • Glen Raphael says:

        It'd make more sense to call it "INS-fee-dodging" if INS sold citizenships and H1B visas to anybody who wanted one. As it is, some of the people we'd like to have in Silicon Valley can't legally work here as citizens or foreign workers even though it would make them and us better off and improve our tax situation. Blueseed is a clever hack to work around the fact that our immigration policies are idiotic.

        • jwz says:

          Seriously? You're drawing a line between "let's hide just off the coast in international waters" and "a protest against unfair immigration policies"?

          Just like protesting against unfair taxes by living here and keeping all of your money in the Cayman Islands. "Clever hack".

          • Dennis Nezic says:

            How would you protest against unfair taxes? (BTW, an non-consentual "contract" is unfair, right?)

        • LafinJack says:

          ...if INS sold citizenships and H1B visas to anybody who wanted one.

          Yet, oddly, throwing money at the problem makes getting a citizenship or visa much easier. Just because the money doesn't go directly do the INS in a quid pro quo transaction doesn't mean that the process isn't tilted towards those with means.

    • Glen Raphael says:

      There isn't really a tax advantage. There's some regulatory advantages in that they can do jurisdictional arbitrage - pick the best set of rules given the circumstance which might not be the rules of the SF bay area. But the main advantage is that the best people from around the world could come essentially be in Silicon Valley despite being unable to get (or keep?) a visa. Being in the same time zone and able to visit now and then is a win compared to the next best option - set up a satellite office in India or wherever. It's just a clever hack to get around bad immigration laws.

      • Juha Autero says:

        You still have to go through immigration when visiting SF. Since only practical way to enter and leave Blueseed is through US, I'm interested in seeing what happens when someone is denied entry to US when visiting San Francisco from Blueseed. In practice Blueseed will be under US jurisdiction and it would be simpler just to rent office space from Silicon Valley to foreign companies.

        • I'll be interested in what happens when someone in the California legislature realises they have a golden opportunity to charge ever-increasing "processing fees" for people visiting daily from just outside the 12 mile zone. Because that would be my first move.

        • Elusis says:

          And given that "working for a US company, living right outside the 12 mile zone in order to circumvent immigration restrictions" would seem to put someone right at the top of the "might try to over-stay or otherwise violate the provisions of their visitor visa/visa waiver" list, I'd really love to see those immigration interviews with Blueseed "visitors." Because I've seen them when my once-upon-a-time partner was coming to visit me in the US, and they are not kidding around, and at one point did actually get him put back on the very next plane home.

      • Elusis says:

        "able to visit now and then" - if you come into the US on a visitor visa or visa waiver, and attend a meeting at your employer's place in Silicon Valley, my understanding is that you have just violated the terms of your visa by performing paid work without a work visa or green card.

        (God forbid American companies should pay their fair share of taxes so we could fund our public schools and universities adequately to produce the kind of talent at home that corporate America feels the need to hire abroad.)

      • Lun Esex says:

        The major premise by being in international waters is to avoid and/or pick and choose the laws/rules/regulations/taxes/fees/etc. set by (arbitrary government of your choice), right?

        And the point of THAT is because those are seen as unfair/anticompetitive/broken/evil/etc., yes?

        And THAT is because the government that SET those same rules is wrong/corrupt/bloated/inefficient/etc., hmm?

        Ok. Obviously that government is so capricious that they will simply make up new rules to compensate for the ones that are being avoided by being out in international waters and you're back to square one.

        The only thing you get is the window of time before they set up the new laws. In the meantime you get to deal with the added logistical costs and complexities of being further offshore than 12 miles for an extended period of time.

        Note that the more successful this venture is, the quicker the new rules will be enacted to compensate for the rules that are being avoided.

        e.g. If Sealand had ever made a big enough nuisance of themselves they'd have been shut down by the U.K. government pretty quickly. Most certainly there are plenty of people in the U.K. government and armed services who recognize how big a joke it is, and let it suffer on purely for the amusement value. (The U.K. does, after all, have the Stark Raving Looney political party and its offshoots. Plus the BNP.)

        • Glen Raphael says:

          Playing blackjack at a casino is illegal in San Diego but if you take a short cruise from there to Ensenada, there's a casino on board that lets you play blackjack once you're well on your way. Despite an ample window of time, the US government hasn't "made up new rules" to stop that, right?

          In fact, there are lots of rights available to people in other countries that the US doesn't try to stop. Kids can drink beer in France, adults can smoke pot in Amsterdam, drivers could (until quite recently) drive 200 mph on freeways in Germany, pharmacists can prescribe drugs in Mexico, etcetera. There is a very small number of issues the government cares enough about to try to impose its will on the rest of the world, and Seasteads are free to experiment in all the other areas. (In general, Americans don't particularly care what non-Americans are doing in places outside America.)

          There's no reason seasteads need to "make a nuisance of themselves". Done properly, seasteading is likely to be of net benefit to the nearest land-based nation. Worst case, they can reach some sort of monetary arrangement to make that happen. And if things sour, they can move somewhere else. (Blueseed can't, since it's a pure Silicon Valley play. But other types of seasteads could.)

          If you're interested in this topic, read the Seasteading FAQ first ( http://www.seasteading.org/about/faq/ ), then we can argue about it in person the next time I get back to California. jwz's blog isn't the right place to hash this out.

          • Lun Esex says:

            A) You don't think that one can count on government taking an interest at the point at which they see enough value in doing so?

            My impression regarding those boats going outside of territorial waters in order to allow their passengers to gamble is that the government simply doesn't currently see enough value in imposing additional specific rules on them.

            B) "there are lots of rights available to people in other countries"

            Indeed, but isn't this about being outside of territorial waters where one is neither subject to, nor protected by any particular government's laws?

            There are many activities in other countries that the U.S. doesn't try to stop, generally because those other countries are their own sovereign nations, with their own laws, and there are treaties to uphold, etc. Seasteaders out in international waters don't necessarily have those same protections.

            But don't forget that there are ALSO many activities in other countries that the U.S. and other nations DO interfere in, even though it may be breaking those countries sovereign laws. Y'know, "international incidents."

            My point here is that people who feel that government is pernicious enough to make something like this worthwhile should ALSO feel that due to said perniciousness they're just going to come up with new ways to get their pound of flesh out of the people doing this, in some way, anyway.

            "Boy, it would sure be ideal to operate out in international waters..." ...until it's no longer ideal to operate out in international waters.

            • Glen Raphael says:

              In the short run any such venture will be flying a flag of convenience - and certainly Blueseed will be - so it's in the exact same situation as a cruise ship. That is, there's a legal fiction that says some specific other country's laws apply, but in practice that country doesn't much care, and was chosen for that reason. Panama is happy to let you say your cruise ship is Panamanian - and will help out if you get into a dispute with some other nation - in return for a small fee; if Panama at some point in the future then starts to become abusive to its flagholders they'll all just stop paying the fee and re-flag with, say, Costa Rica instead. Competion between territorial governments improves the quality of their service in this regard.

              And I say again: read the damn FAQs. This objection of yours (and a great many others that will occur to you on further reflection) is already covered there. If we're talking about Blueseed specifically, their FAQ ( http://www.blueseed.co/faq.html#laws ) says in part:

              "The Blueseed vessel will fly the flag of a country that follows English/American common law and that has reputable judicial systems, such as The Bahamas (English common law) or Marshall Islands (based on American Law). It is important to mention that U.S. nationals will also be subject to certain U.S. laws."

        • Glen Raphael says:

          In the meantime you get to deal with the added logistical costs and complexities of being further offshore than 12 miles for an extended period of time.

          Suppose we call that cost of doing business at sea the "Ocean Tax" and we call one major cost of doing business on land (including things like having to satisfy the PUC when you expand a club in SF) the "Government Tax".

          The Ocean Tax is quite high today but its rate tends to decrease as technology improves. The Government Tax is not declining; rather, it tends to gradually increase over time. So eventually those two lines should cross and (for certain sorts of business) it will become cheaper to start companies at sea than on land.

          • Lun Esex says:

            ...which is why the slope of the top tax rate in the U.S. has been going up so steadily since the late '70's.

            Oh, wait, I was looking at it upside down!!

            • Glen Raphael says:

              ...which is why the slope of the top tax rate in the U.S. has been going up so steadily since the late '70's.

              Oh, wait, I was looking at it upside down!!

              Don't be silly; the "top" tax rate is totally irrelevant. Let's instead look at the total amount of federal taxes collected as a percentage of GDP, that's been between 15-20% since the 1950s; the trend is roughly flat in the last 50 years. (chart here: http://www.project.org/info.php?recordID=151 )

              (And the amount the nation has been spending is also in that range plus a few percent more as we go ever deeper in debt. Chart of that is here: http://www.deptofnumbers.com/blog/2011/02/gov-expenditures-gdp-fraction.png )

              So the "top rate" has jumped all over the place, but the percentage collected hasn't, in part because high rates provide an excuse for adding more tax shelters (and a financial incentive to use/create them) and low rates provide an opportunity to remove tax shelters. When top rates are 90%, nobody is actually paying those rates; people restructure their affairs so as to pay much less.

              So if we were just considering taxes, the US "Government Tax" is on the order of ~20%. Which means every year as your company grows the absolute dollar amount of taxes you pay increases. Whereas the absolute dollar amount you pay for technological goods such as computers or high-tech ocean platforms does not need to increase proportionally to your income and might well decrease as better methods are discovered.

              But in addition to the direct cost of having to pay the feds their 1/5th, the Goverment Tax also include regulatory costs. One useful proxy for regulatory costs is the number of pages in the Federal Register, and that one has definitely been trending upward over time. Chart here: http://neilski.typepad.com/.a/6a00df351efa888833014e8b1710f4970d-pi

              • grendelkhan says:

                Federal taxes as a percentage of GDP are spiking because we're in a recession, i.e., because revenues are plummeting, in large part because of unsustainable tax cuts which were passed only because of a sunset provision, which people are now seriously considering getting rid of. (That, and the two land wars in Asia.)

                low rates provide an opportunity to remove tax shelters

                What color is the sky in your world? The level of whining from rich people about taxes is a function of how big their sense of entitlement is, and the level of tax evasion is a function of how much power they can throw around to do so. The actual tax rate is involved in a very faint way at most.

                One useful proxy for regulatory costs is the number of pages in the Federal Register, and that one has definitely been trending upward over time.

                That's... a really vague proxy. Is that really the best metric of the costs of regulatory compliance available? Really?

          • 205guy says:

            It all comes around to a tax. Taxes are, essentially, a ???, or protection money. You pay them to those who have power over you. There is always someone who has power over you, because power abhors a vacuum. The only way to avoid taxes is to become powerful enough.

            I wonder how may seasteaders are also planning on being cyrogenically frozen?

  6. but what will the Big Daddies look like?

  7. Jeremy Leader says:

    They can't get even their simple 3D rendering perspective right (notice how the view of the service vessel is straight down from above, and the helipad next to it is viewed looking down at ~45 degrees below horizonatal?), but they think they can refit a second-hand ship for continuous all-weather station keeping in the open ocean while also providing all services for an isolated remote community?

    The picture makes it look like it was built out of Lego.

    • nooj says:

      Remember, it doesn't matter if it fails. All that matters is that, in the mean time, the guys who are making the dream a "reality" are taking home a salary and spending someone else's money. Being paid to meet people with more money than brains also helps.

  8. James says:

    It doesn't matter how far away they move the ship, it's still subject to US law. People working on cruise ships require visas. Why would this ship be any different?

    • NotTheBuddha says:

      Cruise ships go inside the 12 mile limit, dock, and have a country of registry.

      • James says:

        This thing is going to have a country of registry too. And even if they don't fly a flag, the laws read that you're subject to the laws of the flag you have the right to display.

  9. Lun Esex says:

    "Next week on Venture Brothers..."

  10. gths says:

    Snow Crash has dated BADLY (fun book to read in the 90s but) but schemes like this always remind me of The Raft.

  11. Dennis Nezic says:

    Did I miss the part where you explain how it's nonsense? I'm always interested to hear how smart people object to the ideas of voluntaryism. Is it possible that you have not heard the argument that "taxation is theft" -- that the State is fundamentally immoral, and we never consented to it, and thus cannot be responsible for "paying back into this (fictitious) commons", that it is founded on the initiation of brutal violence, and thus invalid? Is it possible that even smart people cannot overcome traumatic indoctrination using quite simple and clear reasoning?

    Well, regardless of your (probably) irrational biases, it's nice to see the seasteading project get more publicity :)